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Conflict Resolution In Your Family Business

by Guest on April 25, 2011

Conflict is a normal part of any relationship. However, when conflicts involve family relationships and they include issues regarding business and money, your relationships can take a turn for the worse. While conflict will always be inevitable, here are some ways to prevent and overcome the frequency of these conflicts.

Even if your family business is a model of harmony, having some sort of plan in place to deal with conflicts is a good idea. The more open the family is about discussing and working out the conflicts the more likely your business is to succeed. The key is to take your disagreements and use them to your advantage to make the business better and stronger, rather than let them break you down.

Let’s take a look at some simple guidelines to help avoid problems within the family before they even have the chance to arise.

Conduct regular family meetings

Include all family members who own shares or that play an important role in the business, along with their spouses, in-laws and other members who can influence decision making. Another good idea might be to invite your professional accountants or lawyers, to attend some of these meetings, depending on what is discussed.

Do not assume that informal meetings can do the job, or that discussions will or should “trickle down” to the other members of the family. If you allow this to happen, you run the risk of lack of communication and distrust.

Create a formal written policy governing the participation of the family business.

Specify a process of decision making, rules of succession, salary guidelines and equity, dispute resolution, and other vital points. Do not depend entirely on lawyers or other outsiders to establish a family policy.  The actual process of creating the document within the family is as important as the final result. This is not intended as a legal document, but rather a reflection of the shared family ethics and corporate culture.

Conduct performance evaluations.

Evaluations are also an important source of feelings of grief and family conflicts. Develop a formal structured assessment that everyone understands and accepts. Focus on improving the performance of family work rather than merely to point out its flaws and weaknesses. Use this time to acknowledge the good work and efforts put forth. This will help encourage better individual performances as well as increased team efforts.

Be specific about compensation and property guidelines.

Compensation is another source of conflict in family businesses. Some family businesses will always try to keep peace by paying everyone the same, regardless of their contributions. This false equality can work in the short term but will eventually alienate family members who are not recognized and rewarded for their work.

Similarly, relatives, spouses and distant members of the family may want a stake in the business, but more active members may not be willing to lessen their authority in making decisions. Rather than completely avoiding family members, consider offering votes and non-voting shares. This gives everyone a stake in the business, while limiting decisions to a central group. It can also help maintain the power structure, which otherwise may be spread too thin as future generations enter the business.

Finally, remember that not having enough conflict can be as destructive as having too much conflict. Constructive criticism and debate are essential for growth. You should not “manage” the conflict to avoid it or pretend it does not exist. It’s much better to face these problems head on and use conflict to the advantage of bettering the business.

This article was written by William from Home Loan Finder.

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